While it appears to be a gift in the form of middle-class tax relief, it will ultimately result in the destruction of working Americans’ economic security. It functions as a Trojan horse of sorts.
The contributory nature of Social Security through which beneficiaries pay for their future benefits via the payroll tax dates back to its inception with FDR in 1935. What Trump has revived is the debate on whether to fund Social Security via government revenues or from workers’ contributions. It focus of attack are disability recipients. Why does of all people? To make clear that Social Security is not meant to be a welfare program but a retirement insurance benefit provided by right. Hence a “gratuitous” pension must be conditioned upon a “means’ test,” that is to say, it ought to be delivered only to the poorest Americans. It must hold all grantees down to a minimum standard.
The aim is to cut off the expansion in 1956 to disabled citizens. As FDR had foresawn, by endowing Social Security with its own revenue stream, it remained protected from grasping politicians who wished to eviscerate the program. It gives workers a hard to undermine proprietary interest in benefits.
The Trump proposal is designed as a permanent conversion of Social Security’s revenue stream from the payroll tax to general revenues, a wide-open door to budget-cutting at the expense of retirees and workers. Budget hawks are already going around with the mantra that the cost of Social Security is “unsustainable” never mind that the program still runs a surplus and the fact that its sustainability for the future would only require a modest increase in the tax rate or removal of the cap on taxable wages
Scrapping the payroll tax would make it easier for Congress to cut Social Security benefits under the guise of saving government money. It would be another way to funnel more money to the rich. So much for a populist president out to defend the interests of the people.